VIDYASAGAR UNIVERSITY JOURNAL OF COMMERCE

CORPORATE GOVERNANCE AND TRANSPARENCY SCENARIO IN ASIA
accountability, responsibility and fairness—are unchanged from our previous year’s scores,
with the seventh category this year being the score for the “clean & green” survey that
replaced the previous social responsibility category. Under each of these categories, we
assess the companies on issues that are ‘key’ to constituting good CG. Our CG score is based
on how we rate a company on 54 issues under six main aspects, each with a 15% weighting,
that we take to constitute the concept of CG, to which we add the C&G score with a 10%
weighting. The CG scores for Asian markets during 2003 to 2007 are shown in Table-1.
Table-1: Corporate Governance Watch Scores
Market 2003 2004 2005 2007
1. Hong Kong 73 67 69 67
2. Singapore 77 75 70 65
3. India 66 62 61 56
4. Taiwan 58 55 52 54
5. Japan -- -- -- 51
6. South Korea 55 58 50 49
7. Malaysia 55 60 56 49
8. Thailand 46 53 50 47
9. China 43 48 44 45
10. Philippines 37 50 48 41
11. Indonesia 32 40 37 37
In 2007, the ACGA team has taken a bigger role in the scoring, building up the country
criteria to 87 issues under five categories: CG rules and practices, enforcement, political and
regulatory environment, accounting and auditing standards, as well as overall CG culture. As
in our last survey, absolute scores have fallen for most markets primarily because of the
following changes made to the methodology: (a) New questions: Our last survey had 76
questions across the five categories. This year, we have scored against 87 questions. First
category not just CG rules, but also practices; and (b) Scoring system: The scores are now
based on the following gradations: Yes (1 point); Largely (0.75 points); Somewhat (0.5
points); Marginally (0.25 points); and No (zero point). Wording of some questions are also
made more precise.
The ACGA has tightened its ranking criteria. “The more one looks the less one finds:
country scores have generally declined. Hong Kong and Singapore top the 11 markets we
surveyed; Indonesia and the Philippines at the bottom”. Country ratings are trending
downwards not because of any decline in their CG standards or less efforts on the part of
regulators. Jamie Allen (2005) observes: “Substantial improvements on the basis of key
determinants of CG had taken place in the Asian countries markets rankings for CG.
Countries in Asia were scored against these issues and a weighting to each category applied
to arrive at an overall country score.” It is encouraging that most markets in 2007 scored
8 Vidyasagar University Journal of Commerce